May 6 2013
Do You Really Think The Economy Is Getting Better?
Carrie L. Lukas
It was nice to have a semi-positive employment report. The media certainly seemed anxious to pick up the idea that this was evidence of a true turn around and that brighter economic days are ahead.
These kinds of government reports are always difficult to digest. Many of the top line numbers alone don’t tell us much about the state of the economy.
A falling unemployment rate, for example, can be great news that people are finding more work…. Or it can be evidence that more people are dropping out of the workforce.
An increase in the labor supply can be great news that previously discouraged workers are returning because of new opportunities…. Or it can mean that a household is realizing it can’t get by on one income.
This AEI analysis put a few important numbers from the recent report in context:
US job growth in April beat economist expectations as nonfarm payrolls rose 165,000, and the jobless rate fell to a four-year low of 7.5%. But the report contained worrisome signs that President Obama’s health care reform law is hurting full-time, high-wage employment.
While the American economy added 293,000 jobs last month, according to the separate household survey, the number of persons employed part time for economic reasons — “involuntary part-time workers” as the Labor Department calls them – increased by almost as much, by 278,000 to 7.9 million. These folks were working part time because a) their hours had been cut back or b) they were unable to find a full-time job. At the same time, the U-6 unemployment rate — a broader measure of joblessness that includes discouraged workers and part-timers who want a full-time gig – rose from 13.8% to 13.9%.
What’s more, there was a 0.2 hour decline in the length of the average workweek. This led to 0.4 percentage point drop in the index of average weekly hours, “equaling the largest declines since the recovery began,” notes economist Dean Baker of Center for Economic and Policy Research.
Let’s see, more part timers and fewer hours worked. Economist Douglas Holtz-Eakin says what we’re all thinking: “This is not good news as it reflects the reliance on part-time work. … the decline in hours and rise of part-time work is troubling in light of anecdotal reports of the impact of the Affordable Care Act.”
Americans want to believe that the economy truly is turning around, but I don’t believe that most people have a real sense that that’s really what’s happening today. After all, our experience is also helpful in telling us what’s going on in the country. Do you know people who have been unemployed or under-employed and who are now finding jobs? Have you heard about business startups and people getting excited about a new investment opportunity that they heard about from some friend of a friend? Are new businesses opening down the block on your mainstream?
The answer—for most Americans outside of the beltway at least—is a resounding no to these questions. That reality tells us more than any job report can.